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Asset Protection Planning

Asset Protection Planning

Overview

Asset protection is involved in financial planning and designed to protect someone’s assets from creditor claims. A discretionary trust allows the trustee to ‘have the discretion’ to distribute trust assets/income to beneficiaries of the trust. This is sometimes called a spendthrift provision.  Creditors may not compel a trustee to make distributions for their benefit. As a result, judgments rendered against a beneficiary would not be collectible against trust owned assets.  A dynasty trust is a trust that continues through the succession of generations without the need for renewals. These are also protected from creditor claims, if the proper provisions are included. While the general concept of creditors is widely understood, clients often seek to ensure that an inheritance left to a child is not exposed to a later divorce.  With sound planning, the family wealth can often be preserved within a trust for the benefit of only the family members you choose and not a spouse.